"So what would it take to get me to forty an hour?"
Your best guy asks it at the tailgate on a Friday, and he deserves a real answer. The honest one is that you do not know, because his wage was never designed. It is $34 because he started at $30 three years ago and got two "things are going well" bumps. His raise, like his rate, like the rates of everyone on your crew, is a history of moments rather than a structure.
Most small-crew pay works this way, and it holds up fine right up until it doesn't: until the new hire negotiates better than the loyal veteran and ends up out-earning him, until the fast guy realizes he is paid the same as the slow guy, until a big firm calls your best hand with a number you have no framework to answer.
The way out is not a compensation consultant. It is understanding the three basic structures and what each one actually incentivizes, then being deliberate about which one you run and why. One caveat up front: employment standards, overtime thresholds and what counts as an employee versus a contractor all vary by province and state, and they constrain every choice below. This article is education, not legal or accounting advice; before changing how anyone is paid, check your local rules or ask an accountant who knows them.
Hourly: you are buying time, so time is what you get
Hourly is the default for good reasons: it is simple, it is transparent, it flexes with a variable workload, and everyone in the trades understands it. When work is unpredictable, hourly moves the risk of slow weeks partly onto the worker and the risk of long weeks onto you, which is a fair trade both sides can see.
Be honest about what it incentivizes, though. An hourly wage pays for presence, not progress. The worker's income goes up when the job goes long. Almost none of your people consciously milk the clock, but the structure applies a gentle, constant pressure in that direction, and you feel it in the places nobody decides anything: the pace of pack-up, the length of the supplier run, the third coffee.
Hourly works best when supervision or culture supplies the pace that the pay structure does not: an owner on the tools alongside the crew, a strong lead hand, or a crew small enough that everyone can see everyone. Which is exactly why hourly suits most crews of two to ten.
Three disciplines make the hourly structure work harder for you:
- Know your overtime rules cold. Every jurisdiction has thresholds (daily in some provinces and states, weekly in others) past which hours cost you 1.5x or more. A crew that routinely drifts into overtime because nobody is watching the week is quietly destroying job margins you thought you had.
- Track hours per job, not just per week. A timesheet that says "44 hours" tells you what to pay; one that says "26 on the Patel deck, 18 on the duplex" tells you whether your quotes are any good. The wage is a cost; the allocation is where the learning lives.
- Differentiate rates on capability, visibly. The guy who can run a job alone should not be within two dollars of the guy who needs telling. Hourly's biggest quiet failure is compressing everyone toward the same number, which your best people read, correctly, as a message.
Piece rate: you are buying output, so output is what you get
Piece rate pays per unit of finished work: per square of shingles, per opening, per fixture, per board of drywall hung. Your fast, skilled people can earn dramatically more than they would hourly, and your job cost becomes predictable to the dollar before work starts. Where the work is repetitive, measurable and skill-bound (roofing, siding, drywall, flooring, production framing, punch-list electrical in new builds), piece rate is common because it genuinely works: it recruits and keeps the fastest people, and it makes slow crews expensive rather than invisible.
Its incentive profile is just as pure in the other direction. Piece rate pays for finished units and nothing else, so everything that is not a unit becomes an argument or a corner: prep, protection, cleanup, callbacks, helping the new guy, waiting for the crane. The classic piece-rate failure is speed purchased with quality: work that flies past the eye test and generates warranty calls eight months later, by which time the piece worker is three towns away.
If you run piece rate, run it with both eyes open:
- Define the unit ruthlessly. What is included in "a square"? Flashing? Starter? Tear-off? Every ambiguity becomes a Friday argument.
- Pay for quality explicitly. Inspection before payment, and rework on the installer's time. Say it before the first unit, not after the first callback.
- Cover the non-unit work honestly. Either an hourly rate for defined non-piece tasks or units priced fat enough to absorb them, and be explicit about which you are doing.
- Check the floor. In most jurisdictions, piece workers must still average at least minimum wage per hour worked, and records must prove it. Overtime rules typically still apply too, computed on piece earnings. This trips up more small shops than any other rule in this article; the rules vary by province and state, so know yours.
Piece rate on a two-to-six-person generalist crew doing varied renovation work is usually a poor fit: the units are not repeatable enough to price, and the measuring overhead eats the benefit. It shines where the work rhymes day after day.
Salary: you are buying commitment, and it cuts both ways
A salary pays the same number every week regardless of hours. On small crews it usually appears at exactly one position: the lead hand, foreman or ops person who has stopped being purely a producer and started being the person who thinks about the whole job, plus sometimes a long-tenured hand you want locked in.
What salary buys you is a different relationship with the week. A salaried lead does not watch the clock, thinks in outcomes, and stops treating a Saturday inspection as a negotiation. What it buys the worker is the thing hourly can never offer: an income their mortgage lender and their spouse can rely on, identical in the rainy week and the crunch week. For the right person at the right stage of life, that stability is worth more than a raise.
The risks mirror the benefits. In busy seasons, a salary quietly becomes a pay cut per hour, and your best lead can burn out precisely because the structure never flags how much they are working. Track hours for salaried people anyway, both for legal compliance and to see the problem before they quit over it. In slow seasons, a salary you cannot cover is a fixed cost with a face. And note that salaried does not automatically mean exempt from overtime; the rules on who can be salaried without overtime are specific and vary by jurisdiction, and misclassifying someone is an expensive way to find out.
What each structure teaches your crew
Zoom out and the three structures are answers to one question: what does a worker here do to earn more?
- Hourly says: be here longer. So you must supply the productivity pressure yourself, and build the raise path deliberately, or the answer degrades into "wait and hope."
- Piece says: produce more. So you must supply the quality pressure yourself, and protect the unmeasured work that holds a crew together.
- Salary says: take responsibility. So you must watch the hours yourself, because the structure has stopped doing it.
Most real small crews end up hybrid, and that is not indecision. It is fit: hourly for the crew, salary for the lead, piece for a defined production phase, and occasionally a simple job bonus ("the quote had 120 hours in it; land it under that with the punch list clean and there's $500 across the crew") to point hourly people at the outcome without rebuilding the whole pay system. If you use bonuses, tie them to things workers actually control and define them before the job starts; a bonus computed after the fact by owner's mood is worse than none.
Raises: tie them to something, and say what
Back to the tailgate question, because every structure eventually faces it. The wrong answers are the common ones: raises by tenure alone, by squeaky wheel, or by counteroffer under duress, each of which teaches your crew a lesson you do not want taught (respectively: coast, complain, and interview elsewhere).
The answer that works on a small crew is a capability ladder, written down, even if it is six lines in a notebook. Define the steps in terms of what a person can be trusted with: runs their own small jobs start to finish; can price a change on site; can train a new hire; holds the ticket; deals with clients unsupervised. Attach an honest rate band to each step. Then the raise conversation stops being a negotiation and becomes navigation:
"Forty is the rate where someone runs jobs end to end, client calls and all, without me on site. You're most of the way there. The gap is the client side, so that's what we work on, and when you're doing it, the number follows. I'd rather get you there this year than argue about two dollars today."
That answer costs you nothing today, gives your best guy a map instead of a brush-off, and, quietly, is also your succession plan.
Whatever structure you choose, it runs on one input: accurate hours against real jobs. That part Zeus does handle: your crew clocks in and out on their phones, hours land against the job they worked, and per-job timesheets tell you what every job truly cost in labor. Those timesheets are also the data behind fair rates and honest bonuses. Payroll itself (the calculation of gross-to-net, tax withholding, remittances and stubs) is not something Zeus does. Run that through a payroll service or your accountant. Zeus's job is making sure the hours going into it, and into your next quote, are true.
Frequently asked questions
Should everyone on the crew know each other's rates?
You do not have to publish numbers, but assume they leak, because on small crews they always do, and build a structure you could defend out loud. The capability ladder is exactly that: if two people at the same step earn the same band and everyone knows what moves you up a step, a leaked number causes a conversation instead of a resignation. If a leak would embarrass you, the problem is the pay, not the leak.
Is paying subs or workers a day rate a fourth option?
A day rate is hourly with the meter hidden: fine for genuinely fixed days, but it quietly breaks the moment days run long, and in many jurisdictions employment standards will still treat it as hours worked for minimum wage and overtime purposes. If you use day rates, define the day in hours and know what happens at hour eleven, or you are just running hourly with extra ambiguity. And be careful that "day-rate contractor" is not actually an employee misclassified; the tests for that are local and the penalties are not small.
How often should rates be reviewed?
Once a year on a schedule, plus immediately whenever someone's capability visibly steps up. The scheduled review matters because silence is itself a message: a good hand who has not heard anything about money for two years starts answering recruiters' calls, and by the time they raise it themselves they are often already half out the door. Reviewing does not mean raising every time; it means the conversation reliably happens.
What about profit sharing on a small crew?
At two to ten people it can work, but only after the fundamentals: rates at market, a raise path, and job costing solid enough that "profit" is a real number the crew could believe. A transparent per-job bonus tied to hours-versus-quote and clean handover is usually the honest first step, delivers most of the motivational value, and does not require opening your books or explaining why a slow winter erased the pool.
ZEUS